Medicare Expands DMEPOS Competitive Bidding

The Centers for Medicare & Medicaid Services (CMS) has begun the second phase of an expansion of a competitive bidding program aimed at lowering costs for quality durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS).

The competitive bidding program uses competitions between suppliers to set new, lower payment rates for certain medical equipment and supplies, such as oxygen equipment, walkers, and some types of power wheelchairs. The first phase of the program was successfully implemented Jan. 1, 2011 for nine product categories in nine areas of the country.

“Today, we’re taking steps that will save Medicare, seniors, and taxpayers $28 billion over 10 years,” said CMS Administrator Donald Berwick, MD. “Medicare is paying much more than the private sector for equipment like wheelchairs and walkers. By expanding our successful competitive bidding program, we can ensure that Medicare pays a fair rate for these goods.”

To date, Round One of competitive bidding has yielded a savings of 35 percent compared to the fee schedule, 51 percent of contracts awarded to small businesses, and no changes in beneficiary health status. Inquiries in the first quarter of 2011 totaled less than 0.9 percent of calls to the Medicare call center, and Medicare received only 45 complaints during that time.

As required by law, CMS will conduct the second phase of the program for a similar set of products in 91 major metropolitan areas. Competition begins this fall, and the new prices will go in effect July 1, 2013.

There will be no immediate effect on beneficiaries in areas where the program is expanding. Beneficiaries may continue to use their current suppliers until the new program takes effect in the Round Two areas.

CMS will begin a pre-bidding supplier awareness program for Round Two, and conduct a national mail order competition for diabetic testing supplies at the same time as the Round Two competition. A list of ZIP codes included in Round Two and a list of the specific items in each product category are available on the Competitive Bidding Implementation Contractor website.

See the CMS website for additional information on the competitive bidding program.